Sustainable Development as Corporate Social Responsibility of Shell Company - Case Study Example

Name: Tutor: Title: Sustainable Development as Corporate Social Responsibility of Shell Company Course: Date: Table of Contents Table of Contents 2 2.0 Description of the Shell’s Corporate Social Responsibility (CSR) policies 3 3.0 Why Shell Company sought to address the issue of sustainable develop through social responsibility 7 3.1 The strategic nature Shell’s CSR practice 8 3.2 Whether there has been a culture shift within the organization 9 4.0 Challenges/problems /Legal limitations 10 4.1 The nature of any criticisms brought against the organization 10 4.2 How the organization’s actions were subsequently received 11 5.0 Conclusion 13 6.0 Recommendations 13 7.0 Bibliography 15 Groves, A, 2009, “Shell and Society-a case securing the Niger Delta”, retrieved November 25, 2013 from, 15 15 Ogrean, C & Herciu, M., 2013, ‘Through CSR to Global Competitiveness for Sustainable Development’, Journal in Business and Economics, Vol.8, No.1, pp.95-103. 16 Shell Oil Company, 2013, “Sustainable Development”, retrieved November 26, 2013 from, 16 16 16 Voser, P., 2011, “Profits and Corporate Social Responsibility - Remarks to the Shell Annual Reception 2011”, retrieved November 26, 2013 from, 17 1.0 Background of the company-Shell Shell is a well-known global group of energy and petrochemical companies with about 87,000 employees working in over 70 countries and territories. Shell’s headquarters are located in The Hague, the Netherlands under the strategic leadership of Peter Voser-the Chief Executive Officer (CEO). Royal Dutch Shell plc is the parent company for all Shell group companies. Shell Company adopts advanced technologies and innovative approach to develop sustainable energy future. The main objective of Shell Company is to meet the changing energy needs of society, in a manner that is economically, socially and environmentally achievable now and in its future operations. As its products and services, Shell offers transport fuel to over 10 million customers on daily basis in its 44,000 service stations across the world. In order to develop future sustainability, Shell group companies are focusing on delivering cleaner burning or efficient fuels. In addition, the companies’ products and services are strategically designed to meet the needs of various businesses ranging from construction industry to include aviation and chemical to the shipping sector (Shell Oil Company 2013). 2.0 Description of the Shell’s Corporate Social Responsibility (CSR) policies Basically, Shell’s Corporate Social Responsibility (CSR) policies focus on achieving sustainable development. They accomplish this responsibility by ensuring that they meet the world’s growing energy needs in an economically, environmentally and socially responsible manner. The contribution of Shell group companies to sustainable development is facilitated by the choices they make about the viable projects to invest in. However, a greater emphasis is placed on reducing the impact of their operations and achieving more benefits for the local communities. It has been noted that at their most complex projects, Shell group companies employ experts in environmental and social performance who work collaboratively with their business managers (Shell Oil Company 2013). Research shows that the concern for profits should not be taken as a way of ignoring the interests of all individuals or stakeholders who hold a stake in the firm. This is because the satisfaction of these interests significantly contributes to recognizing and maximizing the shareholder value. Therefore, maximizing the shareholder value should be taken as a crucial criterion to evaluating different corporate social activities (Mitchell et al 1997). This implies that for any investment that Shell Company makes with the objective of promoting sustainable development, should be seen as a response to social demand aimed at increasing shareholder value. Since 1997, the companies’ business principles have included their commitment to achieve sustainable development. The principals require Shell group companies to balance their short-and long-term interests as well as to appropriately integrate economic, environmental and social values into their business decision-making processes. Therefore, as their corporate governance, controls and assurance, every Shell Company is expected to adhere to their environmental and social standards or practices when conducting its businesses. The social governance of their roles and responsibilities is appraised by their Corporate and Social Responsibility Committee. This body assesses their policies and performance based on their Business Principles, Health, Safety, Security and Environment (HSSE) and Social Performance (SP) standards and issues of global concern that requires the attention of the Board of Royal Dutch Shell. It is important to note that the general business principles of Shell are developed based their core values of honesty, integrity and respect for people. Therefore, the company’s general principles as well as Code of Conduct and Ethics act as professional and moral guiding principals for everyone at Shell to behave in line with their core values (Shell Oil Company 2013). The World Business Council for Sustainable Development (WBCSD) (2000, p.2) states that sustainable development involves the integration of economic, environmental and social considerations so as to make balanced judgments and decisions for attaining long-term benefits. Therefore, Shell Company has taken the right steps to ensuring sustainable development as their commitment to human development in a more inclusive and connected as well as prudent and secure manner. However, as corporation Shell should be keen to developing and implementing only strategies that can help to address the corporate challenges associated with corporate sustainable development. The objective of sustainable development has been considered as one of the stringent desideratum that is generally hold forth and assumed in most society levels by various groups of politicians, civil society militants and in academics as well as in firms and non-for-profit organizations. It is important to note that the goal of sustainable development offers to each of these groups the opportunity to act in a responsible manner by implementing corporate social responsibility policies and practices put in place by their management. Thus, it is the responsibility of each of the group to transform the goal intended for sustainable development from what seems to be a meaningless motto to achieving a sustainable reality by exercising appropriate management practices (Ogrean & Herciu 2013). Shell group companies have voluntarily reported on their environmental and social performance because they consider their performance to be important to their stakeholders as well as to their business success. As a result, the companies use their Sustainability Report and their website to inform the public on the general overview of their environmental and social performance for close stakeholders. Such groups include the local communities, shareholders, customers, governmental and non-governmental organizations, investors, employees and suppliers, media and academics. However, in selecting the contents to report on, the companies focus on environmental and social challenges that are fundamental to their key stakeholders. For both internal and external assurance of their information, their Shell Sustainability Report 2012 maintained through the use an External Review Committee made of seven different experts ensure that their Sustainability Report is well balanced, appropriate and responsive to their stakeholders (Shell Sustainable Report 2012). Increasing profits should not be the only social responsibility of a corporation. This is because for a number of other stakeholders which include customers, suppliers, employees and the community expect businesses to boost communities in which they operate. It can be noted that Shell is one of the global companies that acknowledge the view of such stakeholders. This involves increasing profits by exercising sustainable social responsibility. It is apparent that majority of the approaches taken to understand the concept of corporate social responsibility have a common acknowledgement that companies must take full responsibilities towards improving society and environment. This discourages the habit of companies focusing on their own interest (de Bakker, Groenewegen & den Hond 2005). The fundamental idea here is that corporations such as Shell should continue to corporate social responsibility as a means to demonstrate their positive impact on society. It has been noted that key stakeholders such as investors, consumers and employees take action recognize good corporate citizens with a reward, while punish the bad ones. Therefore, it is through a good corporate citizen that a company can build consumer loyalty as well as turn them into company or brand ambassadors. In so doing, such companies influence consumers to actively engage in advocacy behaviors of becoming resilience to the negative company news and positive word of the mouth (Du et al 2007). Research shows that stakeholders expect a company’s boards and management to taken on responsibilities unreservedly so as implement and strategies and controls to effectively manage their impact on society as well as the environment. However, the increased regulation and voluntary standard have caused CSR management to be regarded as a complex task (The Institute of Internal Auditors 2013). It is important for Shell to continuously engage stakeholders in their endeavors as well as let the public know the performance or results. 3.0 Why Shell Company sought to address the issue of sustainable develop through social responsibility At Shell, it is strongly believed that energy sustains people’s daily lives and powers progress across the globe. Therefore, sustainable development for Shell involves working in collaboratively with the governments, communities and forming partnerships so as to deliver more energy in an economically, socially and environmentally responsible manner. It has been reported that this approach to corporate social responsibility helps to shape the business decisions that Shell group companies make (Shell Sustainable Report 2012). Corporate Social Responsibility is defined as a practice that enables a company to strike a balance between profitability and contributes positively to the communities in which it operates. It is also regarded as a company’s obligation to act responsibly to all of the stakeholders within its operations with the objective of attaining sustainable development in economical, social and environmental aspects of stakeholders (Dobers 2009). It is notable that Shell group companies through their business principles are committed to achieve sustainable development. The company is expected to balance their short-and long-term interests as well as to appropriately integrate economic, environmental and social values into their business decision-making processes. 3.1 The strategic nature Shell’s CSR practice The strategy of Shell to generate profitable growth is the major focus driving forward the group companies with their investment program aimed at delivering sustainable growth and providing competitive returns to their shareholders. As they accomplish this, however, Shell group companies are expected to meet the global energy demand in a more responsible manner. Therefore, it is important to note that Shell’s CSR practice of sustainable development is strategic in practice because it enables the company to achieve its missions and objectives. From the 2012 Shell Sustainability Report, it can be noted that the energy they supply helps the company significantly in boosting its economic growth and development. In their operations, Shell group companies focus on addressing the social concerns so as to equally benefit the local communities as well as protect their reputation as they do business (Shell Sustainability Report 2012). For all the new projects directed to corporate social responsibility, Shell group companies must take into consideration environmental and social factors as well as conduct an integrated impact assessment on their environmental, health and social benefits of such projects. Impact assessment enables Shell Companies to deliver benefits through their projects and operations as they work to minimize their impacts on people and environment. Thus, it is through the systematic assessment of the possible environmental, health and social impacts that the companies design their projects and make the necessary adjustments to the existing facilities. Specifically, an impact assessment helps Shell Companies to identify the positive and negative impacts that are most likely to arise from their activities. Therefore, companies affiliated to Shell familiarize themselves with new environmental settings or regulations. Shell group companies also make consultations with relevant and interested parties prior to planning for the earliest stages on how they can reduce the impacts associated with their operations to an acceptable level so as to optimize the delivery of their benefits to the local communities (Shell Oil Company 2013). 3.2 Whether there has been a culture shift within the organization In 1997, Corporate Social Responsibility policies of Shell became more sophisticated, and thus the company shifted its culture to what it referred to as ‘community development’. However, the community development approach was not necessarily required for doing so many things for communities, but rather fostering dialogue and creating more partnerships with them. It has been noted that Shell’s transition leaves “no doubt that the company is committed to its corporate social responsibility of promoting sustainable development by doing business responsibly. In being aware of existing national and international perceptions that Shell massively exploits various regions of its operations, the company has strategically focused on its journey towards achieving sustainable development (Ite 2007). At Shell, safety has been considered critical to responsible delivery of energy. The company develops and operates their facilities with the objective of avoiding incidents that can harm their employees, contractors as well as the nearby communities or simply cause environmental impact. As a result, Shell continuously builds a culture where all people understand their role in an effort to make the company a safer place to work (Shell Sustainability Report 2012). 4.0 Challenges/problems /Legal limitations 4.1 The nature of any criticisms brought against the organization International Oil Companies are struggling to conduct their businesses amidst the widespread anti-oil protests and civil conflicts particularly in the Niger Delta. Shell is one of the largest companies that have faced great security challenges due to the occurrence of an active civil society. As a result, Shell adopted a new approach of ensuring commitment to its corporate social responsibility as well as community engagement which aimed at enhancing a security-development spirit in collaboration with the local people (Hennchen 2011). In their attempt to develop self-disciplined communities by encouraging a culture of respect and civil discussion, Shell intended to protect its interests with a tangible threat. Although the security strategy of Shell ostensibly focused on community engagement, it has subsequently created uncivil tensions on the generational and ethnic lines (Groves 2009). In relating Shell’s transformations to issues of corporate social responsibility, it has been noted that within the context of globalization and political pattern of neo-liberalism, a number of corporations find themselves in reconciling unprecedented prospects for economic growth and high societal expectations. Therefore, civil society’s movements have played a great role in raising awareness to need for addressing environmental and social issues. In addition, the threat which the disagreements associated with such issues cause to profits, have facilitated the general acceptance for corporate social responsibility as a key factor for ensuring good business sense (Holme & Watts 2000). Wheeler (2002, p.124) examines that business leaders are now very much interested in discussions that emphasize on building and maintaining good relationships with the stakeholders. 4.2 How the organization’s actions were subsequently received Recent events have brutally clarified that corporate social responsibility and profits affect the other. In this regard, Peter Voser-the Chief Executive Officer of the Royal Dutch Shell, describes the company’s annual reception in London that Shell is actual balancing its corporate social responsibility and profits in this era of public skepticism. Voser states that Shell has directed part of its profits to maintaining massive investment in the recession to not only securing jobs in the UK but also creating firm foundations for future energy supplies. Furthermore, Voser describes other ways through which Shell is placing itself closer to public scrutiny. The company is opening itself to public inspection by joining the Extractive Industries Transparency Initiative (EITI) that objectively works to increase revenue transparency across the world. Generally, recent events such as the financial crisis and deepest recession have resulted in an era of profound public skepticism and disappointment with most of the business sectors. This is because the actions of major businesses are directed towards a harsh and unforgiving attention (Voser 2011). For Shell group companies they are judged on their actions, transparency level and willingness to work collaboratively with both governments and communities purposely, for the public good. Therefore, in enhancing safety to win public trust and confidence, Shell companies consider this as being judged on their commitment to safety and their ability to carry out their day-to-day business activities in a flawless manner. This implies that ensuring safety has become a mandate and at the heart of everything that Shell companies do. Generally, Shell aims to meet the increasing energy demands in a more responsible way by operating safely, reducing their impact on the environment as well as building trust with their communities. This implies that if Shell group companies fall short of the standard the society expects of them, they must learn from their experiences to improve their level of operation (Shell Sustainability Report 2012). Shell being an engine of growth, for them profound public skepticism means they should continue to promote public awareness about how developing a healthy and profitable business sector creates a healthy society. Although Shell has directed its efforts towards delivering a healthy and sustainable energy supply, they are receiving a sharp reminder in relation to why creating new energy supplies is crucial particularly at this moment when the oil price has rapidly gone back to the $100 mark. Shell Company through its independent charity organization known as Shell Foundation, it is involved in supporting the local communities by enhancing enterprise-based solutions to issues of sustainable growth particularly in developing world. The major areas that the organization focuses on are sustainable transport and developing small enterprises within Africa so as to control indoor air pollution as well as encourage ethical trade. On the issue of transparency, Shell companies are aware that they live in the world of “show me” or in the spotlight (Voser 2011). This implies that civil society expects the companies to be more transparent in their operations and be willing to open up to close public scrutiny. Based on the above report from Mr. Peter Voser, the Chief Executive Office of the Royal Dutch Shell Companies, it is quite clear that the companies’ strategy to generate profitable growth is a key factor driving them forward. Shell is committed to its corporate social responsibility investment of delivering sustainable growth and generating competitive returns to its shareholders. However, Shell does this by ensuring that they help to meet the various global energy demands in a more responsible manner. 5.0 Conclusion Based on the above findings, it can be concluded that the main objective of Shell Company is to meet the changing energy needs of society, in a manner that is economically, socially and environmentally achievable now and in its future operations. For Shell, sustainable development involves working collaboratively with the governments, communities and forming partnerships so as to deliver more energy in an economically, socially and environmentally responsible manner. It is notable that Shell’s CSR practice of sustainable development is strategic in nature because it enables the company to achieve its missions and objectives. 6.0 Recommendations Shell must develop a conscious business effort and adopt strategies that can demonstrate to the communities what they are doing within its capacity to meet their expectations. However, this will require the Shell group companies to build stronger partnerships so as to ensure that community perceptions are included in their early planning processes. Since Shell considers sustainable development as its corporate social responsibility practice through which to meet the world’s increased energy needs in a more economically, socially and environmentally responsible manner, they should not only continue to incorporate these aspects in their business decisions but also share more about their benefits than impacts. For example, this can be done by carefully deciding on which projects to invest in, making new and quality products as well as improving the manner in which they run their businesses. However, in managing the impact of their operations and projects specifically on the environment and society, Shell should continue to adhere to its comprehensive and well-developed standards and requires that promote good health, ensure safety and security for the community as well as monitor its environment and social performance. Shell Company has taken the right steps to ensuring sustainable development as their commitment to human development in a more inclusive and connected as well as prudent and secure manner. However, as corporation Shell should be keen to developing and implementing only strategies that can help to address the corporate challenges associated with corporate sustainable development. 7.0 Bibliography de Bakker, F, Groenewegen, P & den Hond, F., 2005, ‘A bibliometric analysis of 30 years of research and theory on Corporate Social Responsibility/CSP’, Business & Society, Vol.44, No.3, pp.283-317. Dobers, P., 2009, ‘Corporate Social Responsibility and Environmental Management, Management and Methods’, Vol.16, No.4, pp.217-227. Du Pisani, J., 2007, ‘Sustainable development’, Environmental Science, pp.83-96. Groves, A, 2009, “Shell and Society-a case securing the Niger Delta”, retrieved November 25, 2013 from, Holme, R & Watts., 2000, Corporate Social Responsibility: How to develop good business sense, World Business Council for Sustainable Development. Hennchen, E., 2011, How oil mayors support sustainable peace and development in Nigeria: the case of Royal Dutch Shell, Institute for Social Innovation (ESADE). p. 133-145. Institute of Internal Auditors, 2013, “Assessing Corporate Social Responsibility and Sustainable Development”, retrieved November 27, 2013 from, Ite, U., 2007, ‘Changing Times and Strategies: Shell’s Contribution to Sustainable Community Development in the Niger Delta, Nigeria’, Sustainable Development, Vol. 15, pp.1-14 Mitchell, R, Agle, B & Wood, D., 1997, ‘Understanding the theory of Stakeholder Identification and Salience’, Academy of Management Review, Vol.22, No.4, pp.853–886. Ogrean, C & Herciu, M., 2013, ‘Through CSR to Global Competitiveness for Sustainable Development’, Journal in Business and Economics, Vol.8, No.1, pp.95-103. Shell Oil Company, 2013, “Sustainable Development”, retrieved November 26, 2013 from, Shell Sustainability Report, 2012, “Sustainable Development in Shell”, retrieved November 26, 2013 from, Voser, P., 2011, “Profits and Corporate Social Responsibility - Remarks to the Shell Annual Reception 2011”, retrieved November 26, 2013 from, World Business Council for Sustainable Development, 2000, Corporate Social Responsibility: Developing good business sense, Geneva. Wheeler, D, Heik, F & Richard, B, 2002, ‘Paradoxes and Dilemmas related to stakeholder responsive firms: Key lessons learnt from the Case of Shell and the Ogoni’, Journal of Business Ethics, Vol. 39, pp.297-318. Read More